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Exam 10: Long-Term Liabilities

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Question 41

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If the lease term is 75% or more of the property's economic life, the lease agreement should be accounted for as an operating lease.

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Question 42

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Although operating leases are not recorded on the balance sheet by the lessee, they are disclosed in the ____________________________________.

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notes to the financi...

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Question 43

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On the issuance date, the Bonds Payable account had a balance of $50,000,000 and Premium on Bonds Payable had a balance of $1,000,000.What was the issue price of the bonds?

IFRS typically uses a more "rule-based" approach than U.S.GAAP.

The Premium on Bonds Payable account is shown on the balance sheet as

Fox Chapel Company wishes to issue $400,000 of 5-year, 6% bonds, with interest paid annually at the end of the year.The market rate of interest is currently 5%.What information is needed in order to determine the selling price? A) The life of the bonds, the market rate of interest, the bond rating, and the face amount of the bonds. B) The face amount of the bonds, the stated rate of interest, the market rate of interest, and the bond life. C) The face amount of the bonds, the stated rate of interest, the market rate of interest, and the bond life. D) The face amount of the bonds, the market rate of interest, the purpose of the issue, and the bond life.

Bonds were issued at a(n) _____________________ when the issue price exceeds the face value.

Which of the following statements is true with respect to long-term liabilities?

In an operating lease, the lessee is not required to record the right to use the property as an asset or to record the obligation for payments as a liability.

Bennington Corp.issued a $40,000, 10-year bond at the face rate of 8%, paid semiannually.How much cash will the bond investors receive at the end of the first interest period?

The effective interest method amortizes premium or discount in a manner that produces a(n) ______________________ rate of interest from period to period.

A decreasing long-term liability account is presented on the statement of cash flows as

Match the following bond and long-term liability related terms to the appropriate definition. -The excess of the face value of bonds over the issue price.It occurs when the market rate on the bonds exceeds the face rate.

Premium on Bonds Payable is a balance sheet item for Ohio Products Company.How would it most likely be classified on the balance sheet?

Cash interest payment is computed annually when a bond is issued for other than its face value.For a bond issued at a discount, how will this component change as the bond approaches maturity?

All of the following refer to the face rate of interest on a bond except:

Carrying value is computed annually when a bond is issued for other than its face value.For a bond issued at a discount, how will this component change as the bond approaches maturity?

Frank Crawford Corporation's balance sheet showed the following amounts: Current Liabilities, $15,000; Bonds Payable, $8,000; Lease Obligations, $9,000; and Notes Payable, $5,600.Total stockholders' equity was $17,000.The debt-to-equity ratio is:

Deferred income taxes is a balance sheet item for Iowa Products Company.How would it most likely be classified on the balance sheet?

______________________ is either the bond's face value minus any unamortized discount or plus any unamortized premium.